| Item 1.01. | Entry into a Material Definitive Agreement. |
Merger Agreement
On April 25, 2022,
Data Knights Acquisition Corp., a Delaware corporation (the “Company”),
Data Knights Merger Sub, Inc., a Delaware corporation (“Merger Sub”),
and Data Knights, LLC, the Company’s sponsor (the “Sponsor”),
entered into a definitive Agreement and Plan of Merger (the “Merger
Agreement”) with OneMedNet Corporation, Inc., a Delaware corporation (the “Target”,
and together with the Company and Merger Sub, the “Parties”) and Paul
Casey, as seller representative (“Casey”).
The Merger Agreement and the transactions contemplated thereby were
approved by the boards of directors of each of the Company and the Target.
Business Combination
Pursuant to the Merger Agreement,
upon the closing (the “Closing”) of the contemplated transactions (collectively, the “Business Combination”):
| · | The Parties will effect the merger of Merger Sub with and into the Target, with
the Target continuing as the surviving entity (the “Merger”), as a result of which all of the issued and outstanding capital
stock of the Target shall be exchanged shares of the Class A Common Stock of the Company upon the terms set forth in the Merger Agreement. |
| · | The Company will amend and restate its amended and restated certificate of incorporation (the
“Charter”) to, among other matters: (a) change its name to
“OneMedNet Corporation” or such other name as mutually agreed to by the Parties; (b) expand the
Company’s board of directors (the “Board”) to nine individuals
divided into three classes; and (c) remove and change certain provisions in the Charter related to the Company’s status as a
blank check company. Additionally, each then-outstanding share of Class B common stock of the Company will be converted into one
share of Class A Common Stock. |
The Business Combination is expected to close in the second half of
2022, following the receipt of the required approval by the Company’s shareholders and the fulfillment of each Party’s closing
conditions.
Merger
Consideration
In accordance with the terms and subject to the
conditions of the Merger Agreement, the Target’s shareholders collectively shall be entitled to receive
from the Company, in the aggregate, a number of Company’s securities with an aggregate value equal to (a) $200,000,000 minus (b)
the amount, if any, by which the Target’s net working capital amount exceeds the net working capital amount (but not less than
zero), minus (c) the amount of Closing Net Indebtedness (as defined in the Merger Agreement) minus (d) the amount of any transaction
expenses, provided that the merger consideration otherwise payable to the Target’s shareholders is subject to adjustment after
the Closing in accordance with Section 1.15. of the Merger Agreement.
Representations and Warranties;
Covenants
Pursuant to the Merger
Agreement, the Parties made customary representations and warranties for transactions of this type. The representations and warranties
made by the Company and the Target will not survive the Closing. In addition, the Parties agreed to be bound by certain covenants that
are customary for transactions of this type, including obligations of the Parties to use commercially reasonable efforts to operate their
respective businesses in the ordinary course, and to refrain from taking certain specified actions without the prior written consent
of the applicable Party, in each case, subject to certain exceptions and qualifications. Specifically, the Company and the Target have
agreed to take all necessary action such that, effective immediately after the closing of the Business Combination, the Board shall consist
of nine directors, of whom two individuals shall be designated by the Company, with the remaining seven individuals designated by the
Target. In addition, the Company has agreed to adopt an incentive plan in an amount equal 10% of the Company’s equity interests.
Additionally, the Parties have agreed not to solicit, negotiate, or enter into a competing transaction. The covenants of the Parties
in the Merger Agreement generally will not survive the Closing, subject to certain exceptions, including certain covenants and agreements
that by their terms are to be performed in whole or in part after the Closing.
Conditions to Each Party’s
Obligation to Close
Pursuant to the Merger Agreement,
the obligations of the Parties to consummate the Business Combination are subject to the satisfaction or waiver of certain customary closing
conditions of the respective Parties, including, without limitation: (a) the representations and warranties of the respective Parties
being true and correct subject to the materiality standards contained in the Merger Agreement; (b) material compliance by the Parties
of their respective pre-closing covenants and agreements, subject to the standards contained in the Merger Agreement; (c) the approval
by the Company’s stockholders of the Business Combination; (d) the approval by the Target’s stockholders of the Business
Combination; (e) the absence of any Material Adverse Effect (as defined in the Merger Agreement) with respect to the Company or with respect
to the Target since the effective date of the Merger Agreement that is continuing and uncured; (f) the election of the members of the
post-Closing Board consistent with the provisions of the Merger Agreement, a majority of which are to be independent in accordance with
the Nasdaq rules; (g) the Company having at least $5,000,001 in tangible net assets upon the Closing; (h) the entry into certain ancillary
agreements as of the Closing; (i) the lack of any notice or communication from, or position of, the U.S. Securities and Exchange Commission
(the “SEC”) requiring the Company to amend or supplement the Prospectus and Proxy Statement (as defined below); and
(j) the receipt of certain closing deliverables.
Termination
The Merger Agreement
may be terminated under certain customary and limited circumstances at any time prior to the Closing, including, among others, by
the mutual written consent of the Company and the Target, if the Closing has not occurred by June 30, 2022, subject to extension if
the Company secures one or more extensions of the deadline under its organizational documents and IPO prospectus to complete its
initial business combination, if prohibited by a governmental authority, after an uncured breach by a Party of the representations,
warranties, covenants, or agreements contained in the Merger Agreement, after a material adverse effect on the Target or the
Company, or if the Company’s or the Target’s stockholders do not approve the Business Combination.
If the Merger Agreement is validly terminated,
none of the parties to the Merger Agreement will have any liability or any further obligation under the Merger Agreement other than customary
confidentiality obligations, other than liability of any of the Parties for (i) intentional and willful breach of the Merger Agreement
or (ii) fraud.
The foregoing description
of the Merger Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the Merger
Agreement filed as Exhibit 2.1 to this Current Report on Form 8-K and incorporated herein by reference. The Merger Agreement provides
investors with information regarding its terms and is not intended to provide any other factual information about the Parties. In particular,
the assertions embodied in the representations and warranties contained in the Merger Agreement were made as of the execution date of
the Merger Agreement only and are subject to important qualifications and limitations agreed to by the Parties in connection with negotiating
the Merger Agreement and qualified by information in confidential disclosure schedules provided by the Parties in connection with the
signing of the Merger Agreement. These disclosure schedules contain information that modifies, qualifies, and creates exceptions to the
representations and warranties set forth in the Merger Agreement. Moreover, certain representations and warranties in the Merger Agreement
may have been used for the purpose of allocating risk between the Parties rather than establishing matters of fact. Accordingly, you
should not rely on the representations and warranties in the Merger Agreement as characterizations of the actual statements of fact about
the Parties.
Voting Agreement and Sponsor Support
Agreement
In connection with entry
into the Merger Agreement, the Company entered into Voting Agreements with certain stockholders of the Target representing approximately
55% of the outstanding voting power of the Target’s equity securities (the “Target
Stockholders”) pursuant to which the Target Stockholders have agreed to vote their securities in favor of the approval of
the Merger Agreement and the Business Combination, be bound by certain covenants and agreements related to the Business Combination and
to take other customary actions to cause the Business Combination to occur.
In connection with entry into the
Merger Agreement, the Company, the Sponsor and the Target entered into a Sponsor Support Agreement pursuant to which the Sponsor has agreed
to vote its Company securities in favor of the approval of the Merger Agreement and the Business Combination and to take other customary
actions to cause the Business Combination to occur.
The foregoing description of the Voting Agreements
and the Sponsor Support Agreement is subject to and qualified in its entirety by reference to the full text of a Voting Agreement and
the Sponsor Support Agreement, a copy of which is included as Exhibit 2.2 and Exhibit 2.3 respectively and the terms of which are incorporated
by reference.
Agreements to Be Effective as
of or Entered into at Closing
At the Closing, the Company
and certain directors, officers and stockholders of the Target (the “Subject Parties”)
will enter into a lock-up agreement (the “Lock-Up Agreement”), which, among
other things, and subject to certain exceptions, provides for the Company securities held by the Subject Parties to be locked-up for
a period of six months from the date of the Closing and to be subject to certain restrictions on sale thereafter, in accordance with
the terms set forth therein. The foregoing description of the Lock-Up Agreement is subject to and qualified in its entirety by reference
to the full text of the form of the Lock-Up Agreement, a copy of which is included as Exhibit 2.4 hereto, and the terms of which are
incorporated by reference.
At the Closing, the Company,
the Subject Party and the Sponsor will enter into a registration rights agreement (the “Registration
Rights Agreement”), pursuant to which, among other things, the Company will be obligated to file a registration statement
to register the resale of certain securities of the Company held by the Subject Parties and the Sponsor. The Registration Rights Agreement
will also provide the Subject Parties and the Sponsor with “piggy-back” registration rights, subject to certain requirements
and customary conditions. The foregoing description of the Registration Rights Agreement is subject to and qualified in its entirety
by reference to the full text of the form of Registration Rights Agreement, a copy of which is included as Exhibit 2.5 hereto, and the
terms of which are incorporated by reference.
At the Closing, the Company
intends to adopt the Data Knights Acquisition Corp. 2022 Equity Incentive Plan (the “2022
Equity Incentive Plan”), which will provide for the grant of equity incentives up to a maximum of 10% of the shares of the
Class A Common Stock outstanding at the time of effectiveness of the 2022 Equity Incentive Plan to the directors, officers, employees,
consultants and advisors (and prospective directors, officers, employees, consultants and advisors) of the Company. The foregoing description
of the 2022 Equity Incentive Plan is subject to and qualified in its entirety by reference to the full text of the form of 2022 Equity
Incentive Plan, a copy of which is included as Exhibit 2.6 hereto, and the terms of which are incorporated by reference.
Prospectus and Proxy Statement
As promptly as practicable after
the effective date of the Merger Agreement, the Company will file with the SEC a Registration Statement on Form S-4 containing a prospectus
and proxy statement (as amended or supplemented, the “Prospectus and Proxy Statement”) to be delivered to its stockholders
in connection with a special meeting of the Company’s stockholders to be held to consider approval and adoption of (i) the Merger
Agreement and the Business Combination; (ii) the issuance of the Company’s Class A Common Stock in connection with the Business
Combination and any PIPE Financing (as defined below); (iii) the third amended and restated certificate of incorporation of the Company;
(iv) the election of the members of the post-Closing Board whose terms will expire in 2022; (v) the Company’s 2022 Equity Incentive
Plan; (vi) such other matters as the Parties mutually determine to be necessary or appropriate in order to effect the Business Combination
(the approvals described in foregoing clauses (i) through (vi), collectively, the “Stockholder Approval Matters”),and
(vii) the adjournment of the special meeting of the Company’s stockholders, if necessary, to permit further solicitation and vote
of proxies in the reasonable determination of the Company.
Stock Exchange Listing
The Company will use its reasonable
best efforts to cause the Class A Common Stock issued in connection with the Merger Agreement to be approved for listing on the Nasdaq
Capital Market at Closing. During the period from the date hereof until the Closing, the Company will use commercially reasonable efforts
to maintain the listing of its units, Class A Common Stock, and warrants for trading on the Nasdaq Capital Market.
PIPE Financing
Pursuant to the Merger Agreement,
the Company has agreed to use its reasonable commercial efforts to obtain at least $30,000,000 of additional equity capital through the
sale of at least 3,000,000 shares of its Class A Common Stock at $10.00 per share to private investors (the “PIPE Financing”).
There can be no assurance that the Company will be able to arrange the PIPE Financing.